Finding Text
Finding 2023-003 – Allowable Costs and Activities, Eligibility – Compliance Finding
Federal Award. No. 21.026 Homeowner Assistance Fund – COVID 19
Federal Agency: U.S. Department of Treasury
Pass-Through Entity: Missouri Department of Economic Development
Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions
for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering
Federal funds in a manner consistent with underlying agreements, program objectives and the terms and
conditions of the Federal award.
Condition: The Homeowner Assistance Fund was not tested as a major program in 2023. However, during the
current fiscal year, management of the Commission identified certain questionable mortgage assistance
payments. Certain payments have been reported to the appropriate agencies in accordance with regulatory
requirements.
Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards
available and the presence of new requirements for the program were burdensome for management to disburse
in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program
involves a very large number of applications and a high volume of transactions resulting in exposure to error
and irregularity.
Effect: Instances of known and suspected noncompliance were identified by the Commission.
Questioned Costs: The Commission has identified $174,926 of known questioned costs in fiscal year 2023.
Context: Approximately 220 mortgage loan servicers or financial institutions are set up to receive mortgage
assistance payments on behalf of mortgagors. The Commission was alerted by another housing finance agency
through an industry group regarding a third-party entity impersonating a mortgage company. Upon
investigation, the Commission determined the entity was in noncompliance with the program requirements. The
Commission reviewed its onboarding procedures for mortgage loan servicers and enhanced its documentation
review to prevent noncompliant mortgage loan servicers from participating in the program.
Identification As A Repeat Finding: Not a Repeat Finding.
Recommendation: We recommend that management continue to apply resources devoted to mitigating and
preventing further exposure to noncompliance. Additionally, we recommend the Commission review and
consider improvements to its onboarding procedures and related controls for mortgage loan servicers.
Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of
the report.
Anticipated Completion Date: The Commission implemented additional compliance review procedures
during fiscal year 2023 and completed its investigation of the identified case.
Contact Person: Steve Whitson, Director of Community Program